Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Friday, June 22, 2012, from 10:54 a.m. to 11:10 a.m.)

[Opening Remarks by Minister Matsushita]

At the cabinet meeting, relevant ministers reported on white papers concerning trade and commerce, and education, culture, sports, science and technology. In addition, the minister for economy, trade and industry expressed his intention to set a higher target for the value of contracts signed with small and medium-size enterprises, a matter in which we are also interested. The target will be set at 3.8 trillion yen, or 56.3% of the total value of public-sector contracts, which is higher than ever.

Moreover, the bill for the establishment of the nuclear regulatory commission has been enacted, so the Act for the Establishment of the Nuclear Regulatory Commission has been promulgated.

Also, Gender Equality Week begins today, with the slogan “There are you, me and the future.”

At the informal meeting of cabinet ministers held after the cabinet meeting, I told my cabinet colleagues about Okinawa Day, which falls on tomorrow, June 23.

I told them that Okinawa Day, about which I believe there is public awareness, is very important. The military units that had fought on Okinawa to defend local people were disbanded on June 23, 1945. There was no longer anything to defend, from what I hear.

For the 50 days from that day to the end of the war, on August 15, the tragedy of Okinawa turned worse. I talked about that. Female students at Okinawa high schools carried wounded soldiers as they fled southward, and they jumped off a cliff or took their own lives in other ways. That was a tragedy which actually occurred. The Monument of Peace, on which the names of those students are inscribed, stands there. I pointed out that today's Japan rests on the sacrifices made by such people. I insisted that we should review the principles of politics and make efforts to build a great nation that is worthy of the sacrifices.

That is all I have to say.

[Questions & Answers]

Q.

First, regarding AIJ Investment Advisors, four people, including the company's president, Mr. Asakawa, were arrested. Could you comment on the arrest and also tell me about the status of your deliberation on measures to prevent a recurrence of a case like this, including when you will likely work out the measures?

A.

I am aware that on Tuesday, June 19, four people, including President Asakawa of AIJ Investment Advisors and President Nishimura of ITM Securities, were arrested by police on fraud charges.

I am also aware that on the same day, the Securities and Exchange Surveillance Commission (SESC) conducted its second criminal investigation of AIJ Investment Advisors and relevant parties on suspicion of engaging in fraudulent practices related to the conclusion of discretionary investment contracts. The SESC is investigating this case while cooperating with the investigative authorities as needed, with a view to filing criminal accusations.

On March 23, the Financial Services Agency (FSA) cancelled the registration of AIJ Investment Advisors and ordered ITM Securities to suspend business operation for six months. Following the arrest of the relevant persons, the FSA will take strict action after further clarification of facts.

As for the question concerning measures to prevent the recurrence, the FSA will consider effective measures to deal with the problems identified in this case while taking account of financial practices. Although I cannot predict for now when we will work out such measures, we are quickly considering measures to deal with each problem while listening to the opinions of relevant people, and I intend to implement measures one by one as soon as each of them is finalized.

Q.

Let me move on to the second question. Yesterday, there was a media report about an insider trading case involving SMBC Nikko Securities Inc. From what I remember, the SESC conducted criminal investigation in this case in the past. Could you tell me about the current status of this case?

A.

Certainly.

I am aware of the media report you mentioned. I would like to refrain from commenting on the status of the SESC's investigation of a specific criminal case.

Generally speaking, the SESC strictly monitors the market in order to ensure the fairness of transactions and the protection of investors. If an act of violation of the Financial Instruments and Exchange Act is recognized, the SESC will conduct investigation and take strict action as needed.

Q.

I would like to ask you about Nomura Securities, which will announce the results of its investigation next week. I presume that the involvement of Nomura Securities, which is the largest securities company in Japan, in insider trading cases as the lead manager of public offering of stocks has not only undermined confidence in the Japanese market but also caused a large amount of losses to the issuing companies in relation to fund-raising. As for the level of administrative action to be taken by the FSA against Nomura Securities, which has been involved in three such cases, will you consider ordering the company not only to improve its business operation but also to suspend the underwriting activity?

A.

At this time, I would like to refrain from making comments regarding a specific company, including on what administrative action to take against it.

Securities companies need to strictly manage corporate information related to such matters as public offering of new shares from the perspective of preventing unfair trading, such as insider trading, and they are first and foremost required to develop effective internal control systems and conduct business with a high level of compliance awareness and professional ethics. The company faces governance problems, so I would like it to establish strict discipline by fully exercising its self-purification function. That is the most important thing to do.

If a problem is recognized regarding the securities company's business operation as a result of further clarification of facts, the FSA will take strict action in accordance with laws and regulations while checking how the company recognizes and deals with the problem.

Q.

In relation to the case of AIJ Investment Advisors that was mentioned in the first question, you said that the FSA will quickly consider countermeasures after further clarification of facts. At your previous press conference, you made the same statement. A media report said that the FSA would work out measures to prevent the recurrence by around the end of July. Do you have the end of July as a deadline when you say the FSA will quickly consider such measures?

A.

I have not yet decided when we will work out such measures. We will quickly consider such measures while closely examining the facts.

I know well that you would like to know what measures we will take. I would like you to wait for the moment as we are closely examining the details.

Q.

I am Namikawa from Toyo Keizai.

Regarding the case of Nomura Securities, I understand that you cannot make comments as this concerns a specific company. Although someone may have already asked this question previously, how grave an offense do you think a securities company's involvement in an insider trading case is under the Financial Instruments and Exchange Act?

A.

The Financial Instruments and Exchange Act will be amended after the current Diet session, but I would like to refrain from commenting on a specific case.

However, I will take seriously the gravity of the leading Japanese securities company's involvement in insider trading cases.

Q.

Generally speaking, do you think that the FSA may have to consider clarifying the responsibility of securities companies or amending such laws as the Financial Instruments and Exchange Act in light of the frequent occurrence of insider trading cases in which such companies are involved in some way or other?

A.

I believe that it is important to clarify what has been done and how it has been done in this case, so I will make judgment after considering various matters.

(End)

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